Is The Competition Heating Up Among Windows Phone 7 OEMs?

Of the many reasons why Windows Phone 7 has yet to make a big splash in the market, one of them, arguably, has been the fact that no single OEM has seized on the OS as its “hero” platform. That looks like it will change soon enough, with Nokia (NYSE: NOK) ditching its “burning platform” of Symbian and embracing Microsoft (NSDQ: MSFT). But there could be one more stick prodding the fire, and that’s even more OEMs coming into the mix.

No sooner did Microsoft announce three new OEM partners — Acer, Fujitsu and ZTE — which will be coming on with the new Mango version of Windows Phone in the autumn, than the Chinese handset maker ZTE told Reuters that it would be rolling out its first handset in Q3.

Although it’s released some “concept” phone images (see illustration) Nokia has largely been giving 2012 as the date for its first WP7 handset, two quarters after ZTE.

Yet now it looks like that date might be inching up by the hour: today a report surfaced in the Commercial Times of Taiwan (via MBB), that noted that the first device might, in fact, come as soon as this year. This is the second time we’ve seen this date floated; the first was by CEO Stephen Elop, who said in an interview on Finnish TV that there is a lot of pressure to deliver the first device this year.

The first two Nokia WP7 handsets are apparently being produced by Compal. One will come with a touchscreen and a smaller device with come with a keypad.

In that same interview, Elop said that he views Android, and not Apple (NSDQ: AAPL), as the company’s biggest competition, because it has spawned devices at so many different price points.

But it could be that Nokia might be hit with that problem even in its own garden, so to speak, if companies like ZTE, Acer and Fujitsu (to say nothing about incumbents Samsung, HTC and Dell) begin to churn out cheap WP7 devices at a rate faster than Nokia.

This is especially an issue for Nokia in markets like China, where it currently commands a respectable market share for smartphones; is still growing (unlike other geographies where it is in decline); and is increasingly focussing its attention, with an R&D center in Beijing and the possibility of one of its first WP7 handsets to be developed specifically for the Chinese market.

It looks like the best thing for Microsoft to do now would be not to buy Nokia as some have speculated, but to continue to encourage these different OEMs, creating a sense of competition and urgency — and hopefully a hero device in the process.